How To Ask For a Signing Bonus: A Step-By-Step Guide - Highrise (2024)

Money is usually attracted, not pursued -Jim Rohn

You have just received a job offer after a tough interview process. This is exciting and marks the end of an often challenging phase. As you prepare to accept, there's one aspect of a salary offer that can sweeten the deal and make it more enticing: a signing bonus.

A well-negotiated signing bonus can be the icing on the cake before you start your new job.

Whereas signing bonuses have traditionally been used to lure top executives or hard-to-find employees, it is increasingly becoming common.

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How Does a Signing Bonus Work?

A signing bonus is a one-time payment offered by an employer to a new employee as an incentive to join the company. This payment is usually an add-on to make the compensation package more attractive.

Signing bonuses can be paid as a lump sum or stock options, and the timing of the payment can vary depending on company policy.

For example, some companies may opt to stagger the payment, while others may pay them after 90 days or with the first paycheck.

Like other forms of compensation, signing bonuses are taxable. So you have to report the lump sum on your tax return when you file them. If the signing bonus is paid with regular pay, it’s taxed as ordinary income. If not, it's taxed as supplemental wages.

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How to Ask for a Signing Bonus (8 Steps to Follow)

Companies do not always offer bonuses or signing bonuses when an employee joins, but it doesn't mean the offer is off the table. So if you received a job offer and you're discussing all the details with the hiring manager, you can bring up the sign-on bonus question.

Here are some tips on how to ask a hiring manager for a signing bonus:

1. Wait for the formal offer.

Before requesting a signing bonus, it is important to first receive a formal written job offer from the employer. It is also important to note that this differs from a verbal offer that might be made in person or through a phone call.

This typically includes employment information such as job title, salary, benefits, and other important details such as performance expectations.

2. Express gratitude and enthusiasm.

As part of good practice, always say thank you after receiving a job offer. Reiterate your interest in the position and the company.

This sets the pace and the tone for the next engagement. It not only shows your communication skills but also gives the message that you are a lovely person to communicate with.

An example of gratitude is, "I'm calling to express my thanks for your consideration and the offer for this position."

3. Choose the right time to negotiate.

As a rule of thumb, wait until the employer has expressed strong interest in bringing you on board. This could be after the final interview or when they extend the job offer in writing.

This is important as the employer already sees you as the best person available for that position.

If you wait until you start your job, it might be too late.

4. Explain your reasons for requesting a signing bonus.

Most employers are willing to sit down and listen to your reasons for requesting a signing bonus. Some of the reasons you can give can include:

• High-demand skills: If you have high-demand skills — skills coveted by employers — you can leverage them.
• Forgoing other job opportunities: When you have multiple job offers, you can make this known to the employer, and that a signing bonus will help you take their offer.
• You need to offset the cost of relocation: If your employer does not offer relocation reimbursem*nt, a signing bonus can help offset this cost. According to the American Relocation Association, the average cost for relocation ranges from $24,000 for renters to $97,000 for homeowners.

5. Consider the overall package.

Remember to look at the entire compensation package including the base salary, health insurance benefits, stock options, and other perks.

Sometimes a signing bonus amount may pale in comparison to the overall compensation package and this should inform your signing bonus negotiation.

For example, if your employer offers a merit-based salary increase and you are confident in your abilities, you can opt for this option.

6. Understand the value you bring to the company.

You probably will be asked this question during the interview phase: "What value do you bring to the table?"

If your employer agrees with your value proposition, you can leverage it to negotiate a better signing bonus.

During the salary negotiation, be clear on what value you bring to the company.

An example of this can include:

"In my career, I have achieved win-win outcomes for clients and company through effective communication and strategic problem-solving skills. I intend to offer the same in this new position."

7. Quote a specific number & justify.

Have a set number in mind before going for a signing bonus negotiation. This figure should be based on your experience, your skillsets, and general industrial standards. You then use these numbers to determine the potential signing bonus that you deserve.

Example:

"After carefully weighing the opportunity and the benefits I will offer, I'm enthusiastic about the prospect of working with you and your team. I would be interested in a sign-on bonus in the neighborhood of $5000 considering the distinctive abilities and experience I bring to the table."

8. Get it in writing.

Having an agreement that stipulates an agreed signing and bonus amount maintains clarity and prevents misconceptions. Moreover, it also provides legal protection in case your employer negates the agreement. Additionally, a written agreement helps both parties understand their obligations and commitments, fostering transparency and trust.

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Why Do Companies Offer Signing Bonuses?

Companies offer signing bonuses for a variety of reasons, including:

1. To fill in hard-to-staff positions.

Many factors can make it difficult to fill certain positions. To gain a competitive edge and attract qualified candidates, employers may offer signing bonuses. This not only helps them stand out from other companies vying for the same talent but can also be a key factor in attracting top performers, often referred to as "superstar employees."

2. To bridge the employer-employee gap.

During salary negotiations with an employer, a candidate may ask a potential employer for a higher salary and the company cannot afford it. So the employers offer signing bonuses. And a typical signing bonus can reassure the job seekers that the hiring company is willing to provide additional packages, extra money, or other benefits on a lower salary.

Companies considering making up the difference with a sign-on bonus make the entire offer more appealing. This incentive will help firms close the margin between the employer's offer and the employee's desired salary. Also, as an added advantage for companies, it's a one-time payment.

This might interest you: 10 Ways to Negotiate a Job Offer

3. To show employees' worth.

Professionals want to be rewarded, but they also like to feel wanted. If you know that a candidate is in high demand and considering other offers, a sign-on bonus sends a powerful signal that you highly value them and are willing to go the extra mile to bring them on board.

4. To incentivize performance.

A company can use a signing bonus to incentive performance in two ways. First, tying the bonus to defined performance expectations that an employee must attain. Second, offering a staggered payment based on an employee's performance level.

For example, offering a signing bonus of $5,000 for a sales representative with $2,500 as a starting bonus being paid out after the first year of employment and the remaining $2,500 paid after realizing performance targets.

Company offering a signing bonus to employee

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